Kerry CEO raises doubts on sustainability of milk prices

THE current price being paid for milk is not supported by the actual demand in the marketplace, according to the Kerry Group CEO.

His comments come after most of the country’s processors held their milk price for January, however, the global dairy trade auction saw prices drop back slightly.

Kerry Group CEO Edmond Scanlon said stability in milk price was very important for the company and it follows a strong year for dairy prices.

“Anything we can do to get volatility out of our commodities, including dairy, is a positive thing,” he said.

“It’s fair to say the current milk price as it stands is not supported by the actual demand in the marketplace.”

Mr Scanlon said the strong performance in dairy has driven on volumes.

“It’s been driving a huge amount of increase in supply, especially in some of the major European manufacturing and exporting countries, so we would certainly have some concerns about that,” he said.

“There’s no doubt that dairy demand is soft right now. It’s too early in the year to predict what the milk price is going to look like, but from our standpoint, we want to see stability.”

However, ICMSA dairy chair Ger Quain said the current milk market sentiment continues to improve. He said he felt they were being “conditioned” towards accepting price cuts in the months ahead.

“The increase in Dutch quotes for butter and WMP powder has been matched by other European quotes and indicators, and should be convincing processors and co-ops to keep milk price at or close to current levels.”

The Kerry Group this week revealed revenue soared to €6.4bn last year as it recorded a 4.3pc growth in its business volume. Trading profit at the company was up 4.2pc at €781m.

On Brexit, the group said it was “very well-positioned” to deal with potential challenges however elements of the operation at Carrickmacross plant would have to be looked at. Its products go direct to the UK.

The company’s taste and nutrition business saw its volume growth increase by almost 5pc year-on-year to €5.2bn.

Meanwhile, talks on the on the 1.75c/l ‘goodwill’ offer made on the 2017 milk price are ongoing. “That’s very much an internal discussion and it’s important to us that we have a very good relationship with our farmers, and indeed we do for the most part,” said Mr Scanlon.